This is a semi-predictable speculative asset that can make you earn real money. Buying Gold with IRA is a great way to invest for when times are bad. Both silver and gold can function as safe haven assets, but gold tends to have a better track record over longer periods of time. That said, in shorter periods, the specific dynamics of each market end up being more important for their respective returns. Regardless of the asset you buy, remember that neither asset generates cash flow, so the best thing for long-term investors would be to take a buy-and-hold approach with a profitable and growing portfolio of stocks.
Gold is a safe asset, says Mahesh Agrawal, deputy director of specialized solutions at Acuity Knowledge Partners, a business intelligence provider. The price of gold, on the one hand, is in effect a function of the economic crisis, the devaluation of the currency and the manufacture of jewelry. Both gold and silver are extremely liquid assets, considered by all to be a valuable commodity and even by many to be a real currency. The dollar has not been able to turn into gold since President Richard Nixon ended that practice in 1971. Before that, people bought gold bars as a way to diversify their investment portfolio and give them protection against inflation.
However, he points out that “the marriage between gold and inflation can sometimes break in the short term, as interest rates react to rising inflation and divert investments to the debt market. Unless you want to get into the jewelry making game, investing your hard-earned money in precious metals such as gold, silver and platinum isn't the best use of your money. Although silver is more abundant than gold, its supply is restricted as the metal is exhausted in various industries. The gold and silver markets are as liquid as possible, so you'll never have to worry about supply shortages or getting “stuck” with metal.
Investors thinking about investing in gold or silver should carefully consider whether it actually makes sense to them. Once again, silver surpassed gold by a significant margin during the Great Financial Crisis, with the wave of metal purchases in China and the EU debt crisis. Not only is gold worth significantly more per ounce than silver, but it's also the denser of the two metals, making a specific volume of gold worth much more than an equal volume of silver. Therefore, the price of gold moves as investors assess their own investment needs, to what extent they want security and the return expectations of other asset classes, such as stocks and bonds.
Gold is commonly used as a store of value and has relatively limited industrial applications, Agrawal says. Having a good investment professional on your family's team can help you differentiate a good investment from a bad one and build wealth over time.